A goal is just a dream you have with a deadline attached

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I said before Christmas that I would not be setting resolutions, just things to do more or less of. I’m sticking to that, but I am going to set some goals for 2016.

Myself and Geraldine were HUGE One Tree Hill fans. In fact, we pretty much like any American US teen drama!

In One Tree Hill, two of the main characters, Lucas and Hayley make a secret prediction / dream each year on a piece of paper, and hide it in a tin behind a brick in a wall. They share it with one another at the end of the year, to see if it had come true. Each year they add a new predication or dream to this list.

We talk a lot in financial planning about dreams, ambitions, wants, needs, and of course setting goals.

These are all pretty much the same thing, after all – a goal is just a dream you have with a deadline attached – well if its realistic it can be!

In my last blog I talked about the Bridge of Wellbeing and that the first pillar for this bridge is setting values and goals. These values and goals start with dreams and ambitions and are just narrowed down.

I read an article about getting organised, this included the normal things like using one calendar, getting rid of old unwanted papers, getting your paperwork ready for the tax year-end and feng shui in your office. But is also suggested the following:

1.Make a list of your goals

  • Write down at least 10 goals you want to accomplish in your lifetime. Be specific. Then put the list away and update it again next year.

2. Choose one or two goals you want to accomplish this year.

  • Maybe it will be to make more money or take a fabulous holiday. How will you accomplish that goal? What amount of money will you need? How will you do it? Type that information out in a clear sentence, put by your bedside, and read it every morning and every night to help inspire you to reach your goals.

So, I have just sat down and done this. The first one is hard, but I will revisit it again next year and no doubt some things will change. The second was easier for me, I find it easier to think of short-term goals than lifetime ones.

I think most people are the same – and that’s when having a Financial Planner to help you build a personal financial plan can be of great benefit. It lays out a plan for your life, based on your values and goals and encompasses a financial and investment strategy.

However, it’s not set in stone, it’s a projection, a living and breathing thing, that will need revisiting and amending as circumstances change and live evolves. Just like me revisiting my 10 goals next year.

I’m off to find somewhere to hide my list.

The bridge of wellbeing

I touched on the concept of wellbeing and financial planning in a previous post in 2015 and this is a subject that really interests me.

The aim of Lifestyle Financial Planning is to help you enjoy a good life (whatever that means to you), knowing you have sufficient money to support you. The key point here being “enjoy a good life” –  it must also address your wellbeing – it’s not just about having more money and possessions than the next person.

Last October I talked about wellbeing being much more than just physical or financial wellbeing, including career wellbeing, social wellbeing and community wellbeing. Any financial plan you make should consider and include all these things.

For anyone, your plan should start by establishing your goals and values and making your choices in life consistent with these. It should be for yourself – not for your money. So how can you do this?

This is where I revert to the Bridge of Wellbeing and it’s 3 pillars:

  1. Define and understand your values and goals;
  2. Deploy financial strategies that use your resources in a way that is consistent with your values and achieves your goals;
  3. Develop your personal investment strategy.

pillars

A solid financial plan is important for everyone to enjoy the life you choose to live. It doesn’t have to be complex or lengthy. But it’s sometimes hard to know where to start.

Here are some questions that may help to explore your goals and start to build your first pillar in the Bridge of Wellbeing.

  • What is your biggest achievement, and why?
  • What is your greatest fear in relation to your future?
  • What would you say motivates you most?
  • Where do you want to be in 5-10 years time, professionally, personally and financially?
  • What is the one personal goal you would like to achieve within the next year? what about 3-5 years?
  • What causes you stress?
  • If you had unlimited means, what’s the one thing you would like to do with your time that you are not doing today?
  • What are your hobbies? or what do you like to buy with your spare money?
  • What are the most important things that you and your family want to achieve in the future? How would you feel if your couldn’t achieve them? what are you prepared to give up now to achieve them?

Prepare for tomorrow

new beginning

I had the worst nights sleep ever on Sunday before going back to work. I was not particularly worried or stressed, but my brain seemed to be “waking up” again!! I imagine many other people struggled as well.

This is an extract from a book I’m reading about Mindfulness and I wanted to share it – I think it may help!

“At the end of the day,

When you’re lying in bed at night, before going to sleep, spend a few moments going back over the day….

Think of the people you met and talked to and the events and progression of the day.

If you mind starts to wander off into other thoughts or worries, or thinking about what you have to do tomorrow, gently bring it back to the present and continue reviewing the day in the wavelike motion of your breathing.

You are custodian of your own day. See this exercise as preparing for tomorrow by having put today to bed.

You will be asleep very soon.”

(Tiddy Rowan, Mindfulness)

 

This year I am not making resolutions….

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Christmas this year is making me happy and yet melancholy at the same time. I miss family who are no longer with us and I have been thinking a lot about those I know who are having a tough time. I have friends & family who are grieving from losing loved ones and some for who just things are not going too great, at home, work, you name it.

Then there are some really good things to look forward to in 2016, like new babies coming, weddings to attend and my new office, which is almost ready!

2015 has been a busy and exciting year for me. Here some of the highlights I can think of (in no particular order!):

  1. I fulfilled one of last year’s resolutions and learnt to crochet.
  2. We remodelled my front garden so that I have not had to cut any grass this year!
  3. I had a brilliant reunion with old friends at Bluestone in Pembrokeshire, where we reminisced and giggled, as well as discussing how our lives have changed over the past 10 years.
  4. I left one job and joined another, with exciting and new opportunities and experiences, working with a team who are genuine and hardworking.
  5. I was shortlisted for the Certified Financial Planner professional of the year award.
  6. Basil has lived with me for over a year and is now a lovely, funny, sweet natured cat.
  7. Jackson was born and I became a ‘real’ Auntie for the first time. I am so proud of Geraldine and the wonderful mum she has become.
  8. My brother, Oliver, proposed to his girlfriend and there will be a fabulous Anglo-Sikh wedding in 2016. I get to have two outfits.
  9. My family have spent another year being healthy and happy and long may it continue.

So, as 2016 approaches we will no doubt all spend some time looking back to the past, but more importantly, forward to the coming year. It’s a time to reflect on the changes we want (or need) to make and resolve to follow through on those changes.

Last year I decided not to give myself unrealistic resolutions and set only a couple. They were, to enjoy work and stress less and to learn to crochet. I gave up on the exercise more, eat better – as that’s just a given and something we know we should all do anyway.

I have managed to achieve both of these resolutions, although the ‘less stress’ takes work each day, as it’s easy to let things get too much.

I have read that most people fail to achieve the resolutions they set at New Year. Either they forget, get distracted, or give up. Year after year people set the same resolutions but don’t quite get there. Is that because we make these things too huge and unachievable?

I have been thinking that instead we should look at it like setting a goal at any other time of the year and maybe we shouldn’t make such a big deal out of it.

Goals / aims / ambitions are important in life. They help us to function every day. Be it setting goals and planning for your finances, or for a specific event like a wedding or party, get the note pad out and start your plan. It will make you happier!

Here are some important reasons for setting goals.

  1. It’s how we get things done – we set ourselves tasks/goals every single day. To eat, get dressed, get to work.
  2. They can make us feel good – we get satisfaction and happiness by aiming for a target / goal.
  3. It’s how our brain works. Most other creatures work on instinct, humans take action based on planning.
  4. Goals mean clarity – they provide vision and direction so that we don’t waste resources (time, money or energy).
  5. Goals can measure progress and give us purpose.
  6. Goals keep us connected to others. Common goals / interests are the foundation block of families, friends and colleagues.

So, what will 2016 bring for you?

For me it shows signs of being a great year. I am happy at work and home and we will be able to work at the new office. I’m Bridesmaid for my friend Becca and Oliver’s Sikh-Anglo wedding will be wonderful.

So this year I have decided I am not setting resolutions, but rather things I want to do more or less of. Here is my list so far:

goals

Finally, my New Year wish is that Basil will sit on my lap.

Best wishes for Christmas and 2016 and have fun!

 

 

Hobbit at home

home work

Working from home for the last few months has been hard. The novelty of ‘no commute!’ and ‘no office politics!’ soon wears off and you risk becoming a little hobbit, isolated and alone in your office come spare room, and I’ve never liked hobbits.

Despite that I am often out and about to see clients, this doesn’t take up all week and there needs to be time taken to write-up meetings and get the advice out the door. So you then spend a large amount of hours alone.

It makes you consciously aware of your flaws! Laziness, ability to be distracted, tendency to procrastinate, lack of self-discipline, of conscientiousness, and need to check with someone else that what you are doing is right every 30 seconds.  Your days become a personal battle between your good and bad qualities.

It’s honestly more isolating and more draining than my old commute. I have found I’ve become quite emotional, since I can’t regularly express any exasperation, happiness or stress to anyone else, other than to Basil (!), so I think it all builds up.

I’ve taken for granted in the past how much you gain from seeing your colleagues and having a quick 10 minutes talking about your weekend plans or to share joys or problems. Doing this on the phone is just not the same.

The second worst problem is the fact that my office is now my home and my home is now my office. I used to love coming home to my home, my haven and enjoyed my space, time out, alone. Now, there’s not really any true escape.

Whilst of course, when working in an office you still fret about the work awaiting you on your desk, or check your email on the mobile out of hours, but there is still a great advantage and mental release in being able to walk out of the building when your day is done, and mark the beginning of a time and a space that officially belongs to you.

The good news is that in the New Year this will all be easier as I will be in an office. We got the keys this week! It will be small and basic and just as an administration hub to begin with, but I can work on a daily basis with the other members of the team and we are all looking forward to it.

We get desks next week and phone lines the week after and it can’t come quick enough for me! Roll on 2016 when we can be there full time!

Keeping it in the family – pensions technical post

pension reform

As a planner, I’ve always liked pensions. However, it’s true… they are confusing and are not helped by the Government changing the rules all the time!

The latest pension changes – known in the industry as ‘pension reform’ – that came into place from April 2015 – means that everyone should be using them more and trying, at least a little, to understand them better.

This is because, thanks to the changes, pensions can now be passed down from generation to generation and this should be very attractive to lots of people.

So… I’m going to try to explain in simply terms how pensions can be used to pass wealth, tax efficiently, to the future generations – and keep more wealth in the family, rather than HMRC’s hands.

Tax and pensions

Before the new rules there were already good reasons for using pensions:

Tax relief on way in + tax-free growth =

greater pension pot and better lifestyle in retirement

These still remain positive planning reasons for using pensions but now, pensions are even better!

 Passing down wealth

  • The new rules will allow holders of flexible pensions (but not members of Defined Benefit plans) to nominate an individual to inherit their remaining pension fund.
  • This can be anyone at any age and is no longer restricted to ‘dependents’.
  • This means adult children (who may have long since left home and have families of their own) can now benefit and don’t have to wait until their own pension years to access the money.
  • Beneficiaries can continue to have the advantages of tax-free investment returns and, potentially for some beneficiaries, tax-free withdrawals.

On and on…

  • The ability to pass on and on pension wealth does not stop with one generation.
  • The first nominated beneficiary can nominate their own successor who will take over the fund following their death.
  • This will allow accumulated pension wealth to cascade down the generations, whilst continuing to enjoy the tax freedoms that the pension wrapper will provide.

TECHNICAL BIT: The Age 75 rule and income tax

  •  If the original member dies after age 75, any withdrawals will be taxed at the beneficiary’s marginal rate of Income Tax.
  • If death occurs before age 75, the nominated beneficiary has a pot of money they can access at any time completely tax-free.
  • In either case, the funds are outside the beneficiary’s estate for Inheritance Tax while they remain within the pension and will continue to enjoy tax-free growth.

Tax rate determined by age at last death

Each time a pension fund is inherited, the tax rate will be reset by the age at death of the last beneficiary / owner.

For example:

Mary, a widow, dies age 82 and had nominated her son Oliver to receive her pension. As Mary died after age 75, Oliver is taxable at his marginal rate on any income withdrawals. This could mean he pays 45% income tax (highest rate).

Sadly, Oliver dies age 65. He leaves the remaining fund to his daughter Simone. Simone can take withdrawals from her successor’s pension account tax-free as Oliver died before 75.

Review review review

The death benefit rules changes mean that for those looking to pass on any remaining pension funds on death to their family a review of the current plan is required.

This means revisiting existing death benefit nominations to ensure they continue to do what you want. Under the new rules, the scheme administrator cannot pay out a nominee’s pension drawdown if there’s an existing dependent (or an existing nomination in place that says something different).

Don’t forget that a nomination doesn’t have to be all or nothing. It’s possible to nominate a number of different beneficiaries and to perhaps skip a generation with some of the fund.

It’s also important to check that the current pension provider can allow what you want to do. Just because the legislation allows, doesn’t mean everyone will be able to in the contract they hold.

For the purposes of this blog and to keep it simple I have just referred to a ‘pension’. However, it should be noted that this ‘pension’ will need to be a Flexi Access Drawdown Pension. In addition, all of this type of planning relies on the existing pension arrangement being able to offer the nominees’ and successors’ drawdown accounts.

You will need financial advice to establish the correct pension contract / vehicle to use and some existing providers may be unable to provide this as an option.

Make sure you seek advice and #planitwell – call me on 07974 329864 for more information.

 

That silly thing called worry

head full of worries

Worrying runs in my family. My Dad worries, my sister Geraldine, worries, it stops sleep. Mum and Geraldine have note pads next to their beds to scribble down things they wake up thinking about at night.

As a child, I worried constantly about fire, I hated bonfires or candles. I had repetitive nightmares that the house burned down, with all of us in it.  That fear / worry has mainly gone now as an adult, but I still have the dream about twice a year.

Geraldine was given some little ‘worry dolls’ as a child. I love this idea and I think whilst she was very young it helped her a lot.

For those that don’t know, worry dolls (muñecas quitapenas), or trouble dolls, are very small and colorful dolls traditionally made in Guatemala.  A person (usually a child) who cannot sleep due to worrying can express their worries to a doll and place it under their pillow before going to sleep.  According to folklore, the doll is thought to worry in the person’s place, thereby permitting the person to sleep peacefully. The person will wake up without their worries, which have been taken away by the dolls during the night.

Worry Dolls:

Worry_dolls

 

 

 

 

 

“Worry dolls” by Leena – Own work (From Wikipedia)

A conversation this week made me realise that it’s really important to manage worry in life, or it can overwhelm you so much that you cannot function or see the best way forward.

Winston Churchill said:

 ‘Let our advance worrying become advance thinking and planning’

Sounds great right?  But the fact is…..we all worry even though we know it’s silly to and we all know we could be using our time and efforts more constructively – yet we still worry.

I think the main thing is that as an adult you have to develop a strategy – like the little worry dolls – to help rid ourselves of the worries we can DO NOTHING ABOUT, and move on to working on those things that we can control.  Let worry become constructive planning.

Everyone needs to work out a way to manage the worry and slow the brain down and the method that suits each person is likely to be different.

Whilst taking my Ceramics degree and whilst I was heavily involved in the ‘arty’ world, I went to a Buddhist Centre in Cardiff once a week and learnt how to meditate.  Hippy Dippy and all that – but it did really help me understand the importance of time out, mindfulness and breathing.

I still regularly use some of these techniques and it helps a lot when I am lying in bed and my brain is still very active or I’m worrying.

I also find any type of craft activity helps too. I distract myself with crochet, knitting, sewing – you name it, I will try. Keeping my brain busy with other things (and not heavy-going or work things) means there is not time to worry and I am relaxed for bed.

Breathing to relax and ease worry:

A deeply relaxed person breathes around seven times a minute. Slow your breathing down and you will automatically relax.

This is especially helpful when you need to focus, do a presentation, attend an interview or just simply to calm down.

  1. Breathe in (count to 6 – approx.)
  2. Hold it (count to 2)
  3.  Let the breath out slowly (count to 8 – approx.)

(*This is from ‘The little book of Mindfulness’ – Tiddy Rowan).

I sleep pretty well nowadays, but if I don’t I revert to the breathing techinque.

In case you are interested, here are some crafty things I’ve been making in my down time:

Ninja Turles for cat toys:

tutles

Heart shaped bowls on a large 15mm crochet hook with Zpagetti (Tshirt) Yarn:

hearts

Dancing to your height

I am a huge Strictly Come Dancing fan. I even loved the original ‘Come Dancing’ with Rosemarie Ford. It’s the glitter, costumes and drama of it! I love Autumn and Winter Saturday nights, cozied up with a glass of wine and enjoying the wholesomeness and fun of it all with family and friends.

Earlier this week, on the sister show, It Take Two, Jeremy Vine spoke about how a professional dancer had told him right at the start of the competition to “Dance your height”. This really stuck with me and got me thinking.

I’ve read a lot about successful people having two characteristics: they believe in themselves and they are always maintaining a positive disposition in everything.

I think this is easier said than done, especially when things do not go according to the plan and emotions come into play.

I’m generally a very positive person, but sometimes life and things can just get you down. My Father refers to it as having the devil on your shoulder, that nagging voice, wearing you down saying that ‘you can’t do it’ or ‘don’t bother no one cares’.

A lot of this, I think, is about mindset and your support network. If you can master the art of positive thinking and surround yourself with helpful and optimistic people, then I think you can be better equipped for the hurdles and obstacles that get thrown in the way of your plans.

A step towards mastering this positive thinking is to be proud of your achievements no matter how big or small they are – this itself I think can help maintain a positive mindset.

It’s surprising the time and energy we expend on worrying what other people think of us; our appearance, our intellect and our faults. We should more often use the time to consider our strengths, our abilities and our best points.

Proud

Saying this, I’m not very good at receiving praise or accepting compliments without being embarrassed. But, I’m determined to learn that there is absolutely nothing wrong with celebrating your successes and achievements. I’ve put in the hard work and I should feel happy!

On that note, I am proud to show you the wonderful badge that I received from the IFP, showing that I was shortlisted (down to 3 people) as CFP Professional of the year 2015. I am very proud of this.

Award

Enjoy Strictly this weekend if you watch it! It’s the Halloween spooktacular! I’m routing for Jeremy to Dance Tall and Proud.

Children and savings

piggy

I’ve been asked twice this month about options for investing for children, specifically for Grandparents of very young children. One of these times of course was for little Jackson Strong, the other by a friend, as her Father wants to give money to her children.

So I thought I would give a summary here of what can be done, although not giving specific investment advice about where to invest the money – for that, you need to speak to me!

Tax and savings

Most generally and for small amounts, it makes sense to save in the child’s name, rather than parents / grandparents.

This means interest earned is generally tax-free (up to certain limits) as children get the same tax-free allowance as adults. So, whether you are saving into a Junior ISA (JISA) or an ordinary savings account your child’s interest will remain tax-free up to the HMRC personal allowance limit, set at £11,000 for 2015/16.

The exception to this is the so-called ‘£100 rule’. This stipulates that any amount of interest exceeding £100 that results from a payment made by a parent / grandparent to a child must be taxed at the parent’s tax rate. This rule is applied to almost all children’s savings accounts except JISAs – which are totally tax-free in the same way as adult ISAs are.

Financial responsibility

Bear in mind that any account held in a child’s name becomes legally theirs to do with as they wish at age 18! And as we all remember, that is not always the best age to have a large lump sum to hand!

The alternative is to hold the money in your own name (see below) or set up a Trust – but I am not going to into detail about that today.

 So….Investment Options

JISA – Junior ISA

  • These work like an adult ISA
  • They are tax-free, but are for the long-term.
  • They replace the Child Trust Fund (CTF) and if a child was not eligible for the CTF they can have a JISA.
  • JISAs have an annual savings limit of £4,080 (current tax year) which can be held entirely in cash, stocks and shares or any mixture of the two.
  • Anyone can pay into the JISA although a parent or legal guardian must set it up and funds cannot be withdrawn until the child turns 18.
  • As an added bonus, JISAs can be held concurrently with an adult ISA between the ages of 16 and 18, giving the child a boosted tax-free allowance for two years.
  • Only two JISAs may be held per child at any one time – one cash, one stocks and shares.

Regular savings

  • Children’s savings accounts offer varying interest rates depending on your chosen bank or building society and the tax rules stated earlier apply.
  • Be warned – you will have to apply for gross interest to be paid by completing a form R85, the bank should provide this to you!
  • They allow instant access to the funds at any time, unlike JISAs which effectively lock the money away until age 18.
  • They can be added to by anyone, anytime, without limit.
  • They can be useful for teaching children financial housekeeping as the child is given access to the account at age seven and can pay in and out of the account as they grow. I remember how nice it was to save in my Nationwide Teddy!
  • NOTE however, regular accounts that pay good interest rates tend to have lower savings limits than JISAs with many providers cutting interest rates if deposits exceed a certain amount.

Pensions – forward planning by 55 years!

  • Child pensions allow parents to pay into a pension for their child from the moment they are born.
  • Like adult pensions, child pensions are hugely tax efficient and are eligible for 20 % tax relief meaning that you only have to pay in £2,800 per year to receive £3,600 back.
  • The maximum that can be paid per annum is £2,800.
  • They are incredibly attractive if you are the kind of person who really enjoys planning ahead and you want to help your child enjoy their twilight years.
  • At an assumed growth rate of 5%, 18 yearly payments of £2,800 would equal £1,053,405 by the time your child reaches 65! Now that’s proper forward planning!
  • Like all pension plans however, they cannot be accessed until 55 at the earliest and many see this as a real downside.

Adult savings

  • It is perfectly possible to save money in your own name for your children or grandchildren.
  • The advantages are that you will be able to control the money, even when the child turns 18.
  • The disadvantage is that the money will be taxed on you in the normal way.
  • It’s also worth considering that the child has no automatic legal right to the money and this could cause problems in the event of death or divorce.

What’s best you ask? …. Well… what’s it for?

  1. What you are saving for and therefore the term. A Car? University? House deposit?
  2. How do you feel about access? At 7, 18 or retirement?!

It’s likely to be best to consider a mix of a few things, but bear in mind most offer really poor cash returns, so shop around for the best deals and remember you can’t beat the excellent tax efficient growth a JISA can offer (and it can convert into an adult ISA).

Hope this helps some of you!